Taxation Changes

The rules are changing in April 2015. Currently, when passing your pension fund to your heirs it will be subject to 55% tax. (The only exception is if you die before age 75 and you have not taken anything from your pension. In such isolated cases it is possible to pass a pension on as a tax-free lump sum to your heirs.)

The new pension rule changes will make it possible for Personal Pensions funds, including those already in drawdown, to be passed on to heirs free of tax provided the money is kept in a pension. This means:

You can make increased contributions to yourr pension fund knowing that, from age 55, you can both draw on your pension without restriction, but also pass on any unused pension to your heirs as a tax free lump sum on death.

At any age, your heirs would be entitle to make withdrawals from the pension fund you have left them. They would not have to wait until they reached 55.

Should your Heirs decide to make a withdrawals from the pension fund:​

If you died before age 75, the withdrawal would be tax free

If you died after age 75, the withdrawal would be treated as their income for income tax purposes and they would pay income tax.